EXHIBIT N
NON-QUALIFIED STOCK OPTION AGREEMENT
Non-Qualified Stock Option Agreement (this "Option
Agreement"), dated as of April 25, 2005 (the "Grant Date"), between Digital
Fusion, Inc. (the "Company") and G. Xxxxxxx Xxxx (the "Recipient").
WHEREAS, the Board of Directors of the Company (the "Board")
or a duly constituted committee thereof has determined that it would be in the
best interest of the Company and its stockholders to grant the options provided
herein to the Recipient.
NOW, THEREFORE, in consideration of the covenants contained
herein and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise indicated, whenever capitalized terms are
used in this Option Agreement, they shall have the meanings set forth below.
"CHANGE OF CONTROL" shall mean an event whereby a person or
entity becomes the beneficial owner as calculated in accordance with Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended, of at least
50% of the then outstanding Common Stock.
"COMMITTEE" shall mean the Organization and Compensation
Committee, if any, of the Board.
"COMMON STOCK" shall mean the common stock of the Company, par
value $.01.
"FAIR MARKET VALUE" shall mean the average of the opening and
closing price of the Common Stock of the Grant Date.
"OPTION SHARES" shall mean, with respect to the Recipient, (a)
any shares of Common Stock (or other shares of capital stock of the Company)
issuable or issued by the Company upon exercise of any Option by the Recipient
and (b) any shares of the capital stock of the Company issuable or issued in
respect of any of the securities described in clause (a) above, by way of stock
dividend, stock split, merger, consolidation, reorganization or other
recapitalization.
"PERSON" shall mean an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"SUBSIDIARY" shall mean any corporation of which the Company
owns, directly or through one or more Subsidiaries, a fifty percent (50%) or
more equity interest in such corporation or has the right to nominate fifty
percent (50%) or more of the members of the board of directors or other
governing body of the corporation.
"TRANSFER" shall mean, with respect to any Option, the gift,
sale, assignment, transfer, pledge, hypothecation or other disposition (whether
for or without consideration and whether voluntary, involuntary or by operation
of law) of such Option or any interest therein.
ARTICLE II
GRANT OF OPTIONS
2.1 GRANT OF OPTIONS. The Recipient is hereby granted Options
representing the right to acquire 15,000 shares of Common Stock. Unless
otherwise indicated herein, references herein to "Options" means the Options
granted hereby.
2.2 EXERCISE PRICE. The Exercise Price of the Options shall be
at $2.06 per share ("Exercise Price") of the Common Stock.
2.3 CHANGES IN COMMON STOCK. In the event of any change in the
outstanding shares of Common Stock by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, combination or exchange of shares or
other similar corporate change or in the event of any special distribution to
the stockholders, the Committee shall make equitable adjustments in the number
of shares and prices per share applicable to Options then outstanding.
2.4 REPRESENTATION OF THE COMPANY AS TO THE COMMON STOCK. The
Company represents and warrants to the Recipient that all of the Option Shares
to be issued upon the exercise of the Options pursuant to this Option Agreement,
when issued in accordance with the terms of this Option Agreement, will be duly
authorized and validly issued, fully paid and nonassessable.
ARTICLE III
EXERCISABILITY OF OPTIONS
Options shall vest upon the earliest to occur of the events
described in Sections 3.1 or 3.2, and shall become exercisable as described in
Section 3.3:
3.1 TIME VESTING. If not sooner vested, Options granted
pursuant to this Option Agreement vest one-hundred percent (100%) immediately as
of the date hereof. In the event that the calculation of the number of Options
to vest at any given time pursuant to this Section 3.1 results in a number which
is not a whole number, such number shall be rounded down to the nearest whole
number.
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3.2 VESTING UPON CHANGE IN CONTROL, DEATH, OR DISABILITY. If
not sooner vested, all Options shall vest upon the occurrence of a Change in
Control, or the death, or Disability of the Recipient.
3.3 EXERCISE; RESTRICTION ON EXERCISE. No unvested Options shall be
exerciseable. All vested Options shall become exercisable at the time they first
vest and shall cease to be exercisable at the time they expire as provided in
Article V.
ARTICLE IV
EXERCISE OF OPTIONS
4.1 PERSON WHO CAN EXERCISE. Options may only be exercised by
the Recipient, except that, in the event of Disability, Options may be exercised
by the Recipient's legal guardian or legal representative and, in the event of
death, Options may be exercised by the executor or administrator of the
Recipient's estate or the Person or Persons to whom the Recipient's rights under
the Options pass by will or the laws of descent and distribution.
4.2 PROCEDURE FOR EXERCISE. Vested Options may be exercised in
whole or in part with respect to any portion thereof that is exercisable. To
exercise an Option, the Recipient (or such other Person who shall be permitted
to exercise the Option as set forth in Section 4.1) must complete, sign and
deliver to the Company an Exercise Notice together with payment in full of the
Exercise Price multiplied by the number of shares of Common Stock with respect
to which the Option is exercised. Payment of the Exercise Price shall be made in
cash (including check, bank draft or money order). The right to exercise the
Option shall be subject to the satisfaction of all conditions set forth in the
Exercise Notice. In lieu of paying the Exercise Price, upon the Recipient's (or
such other Person's) request, with the Committee's or the Board's consent (which
may or may not be given in its sole discretion), the Company shall deliver to
the Recipient a number of shares of Common Stock equal to (A) divided by (B)
where (A) is the positive difference between (i) the Fair Market Value of a
share of Common Stock on the date on which the Exercise Notice is received by
the Company (i.e., the exercise date), and (ii) the Exercise Price, multiplied
by (iii) the number of shares for which the Option is being exercised, and (B)
is the Fair Market Value of a share of Common Stock on the exercise date.
4.3 WITHHOLDING OF TAXES. The Company and its Subsidiaries
shall withhold from any amounts due and payable by the Company and its
Subsidiaries to the Recipient (or secure payment from the Recipient in lieu of
withholding) the amount of any withholding or other tax due from the Company
with respect to any Options Shares issuable under this Option Agreement, and the
Company may defer such issuance until such withholding or payment is made unless
otherwise indemnified to its satisfaction with respect thereto.
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ARTICLE V
EXPIRATION OF OPTIONS
5.1 EXPIRATION. Vested and unvested Options shall expire at
5:00 p.m. Eastern Standard Time on the tenth anniversary of the Grant Date.
5.2 CANCELLATION. Vested and unvested Options which expire
unexercised shall be treated as cancelled.
ARTICLE VI
MISCELLANEOUS
6.1 OPTIONS NOT TRANSFERABLE. Options may not be Transferred
(other than by will or laws of descent and distribution). Any attempt to effect
a Transfer of Options that is not permitted by this Option Agreement shall be
null and void.
6.2 NOTICES. All notices, requests and demands to or upon a
party hereto must, to be effective, be in writing and shall be deemed to have
been duly given or made when delivered by hand or three days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows or to such other address of which the intended
receiving party hereto shall have been duly notified hereunder:
(a) If to the Company, to the following address:
Digital Fusion, Inc.
0000-X Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Corporate Secretary
Telecopy: (000) 000-0000
(b) If to the Recipient, to the address or telecopy number as shown on the
signature page hereto.
6.3 AMENDMENT. This Option Agreement may be amended only by a
writing executed by the parties hereto which specifically states that it is
amending this Option Agreement.
6.4 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Alabama
applicable to contracts made and to be performed therein without regard to the
conflicts of law principles thereof.
6.5 TITLES. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this
Option Agreement.
IN WITNESS WHEREOF, this Option Agreement has been executed
and delivered by the parties hereto.
G. XXXXXXX XXXX DIGITAL FUSION, INC.
/S/ G. Xxxxxxx Xxxx By: /S/ Xxx X. Xxxxxxx, Iii
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Signed Name: Xxx X. Xxxxxxx, Iii
Title: Chairman & CEO
Name:
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Home Address:
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